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And Now the Hard Part – Fast Company – Rachel Elkington

by on October 10, 2007

The Fast Company article “And Now the Hard Part” described the growing company JetBlue and the personality of JetBlue CEO David Neelman. At the time the article was written, JetBlue had been a successful small company, and had just undertaken an initiative grow quickly.
The author of the Fast Company article – Chuck Salter – traveled with Neelman on several JetBlue flights and interviewed him about the company and his philosophy of management. In his article, Salter made a prediction that, although growth might be difficult for JetBlue (thus the title “And Now the Hard Part”) it would be possible, and JetBlue would become a major contender in domestic United States airlines. Salter based his conclusion on several factors: JetBlue’s IT infrastructure was – in Salter’s estimation – good, and ready to handle much more input than it currently received. Also, the culture of JetBlue was friendly, proactive, and provided great service to customers. The greatest challenge, Salter observed, was the scale-ability of this culture. His question: as a company grows larger, can it hold onto this small town friendliness? Most definitively, Salter argued that Neelman was the company’s greatest asset, and that if he could be ‘scaled,’ JetBlue would successfully grow.

Since May 2004 was a few years ago, Salter’s conclusions were easy to test by looking into the progress JetBlue made in the marketplace since then. Progress is the wrong word to describe what happened to JetBlue – the words ‘terrible fate’ are more apt. A Newsweek article on the 5th of March 2007 put it best

In its brief but glorious life, JetBlue Airways has become a business-school case study. Business junkies everywhere have praised the customer service, new planes and clever marketing that turned JetBlue from a concept into the nation’s eighth biggest airline in only eight years. But now that JetBlue has bungled its way into a Valentine’s Day customer massacre and become the butt of late-night comics’ jokes… [1]

The customer massacre to which the article refers was the pivotal point in JetBlue’s growth initiative. On Febuary 14th 2007 an ice-storm hit New York’s JFK airport, which is the JetBlue hub. Operations at the airline did not handle the weather problem effectively, and thousands of their passengers were stranded at the airport – some for days. Also, 2,500 pieces of luggage were misplaced. This problem made national headlines and alienated most of JetBlue customer base.

Not only did the Valentine’s Day meltdown throw into serious question JetBlue’s ability to grow, it dealt a blow to the confidence the organization had in it’s charismatic leader, David Neelman. “New York-based discounter JetBlue on Thursday replaced founder David Neeleman as its chief executive, part of a broader effort by the airline to improve operations after its Valentine’s Day meltdown.”[2] Neelman, the golden child of JetBlue was given a noconfidence vote after the operational meltdown. This definitively answered the question: Can Neelan be scaled?
JetBlue has made moves since the change in leadership to overcome the operational catastrophe it encountered. It contacted customers affected by the meltdown to ask how it could win their trust back. JetBlue also gave out about $14 million in vouchers to affected customers. The jury is still out on whether JetBlue can recover, but my prediction is no. I think they are too over-extended and no longer have the goodwill of their customer base.

Reading this article, and the articles that described the outcome of JetBlue’s business taught me several things about change management. First, and foremost, growth is a dangerous thing. It is not the inherent good that many assume it to be, it is a calculated risk. Second, this story highlights that the personality of an entrepreneur may not be well suited to handling the day to day operations of a large company. Neelman was great at helping JetBlue start out, but when it came to tightening operations in advance of any major problems, he failed completely. The story also tells a cautionary tale about putting ‘nice to haves’ (JetBlue’s extra perks and cool image) above basic business considerations and concrete details. Visioning can only get you so far, all the details have to be in place. That lesson should serve me well as I think about someday starting my own business.

Reading about JetBlue made me ponder the following – I would be interested in hearing my class mates’ thoughts on these.

  • Are JetBlue’s problems this just a standard growth problem?
  • Was this just a really unlikely and unfortunate circumstance?
  • Is this something unique to the airline industry, that one mismanaged storm can jeopardize the future of the company, or are all types of industry this vulnerable?
  • If you had been stuck in JFK for two days, would you give JetBlue another chance?
  • Will replacing Neelman be enough?

    Articles:
    Newsweek, “Skies Were Cloudy Before Jet Blew It,” Allan Sloan with Temma Ehrenfeld, March 5th, 2007.
    Aviation Daily, “JetBlue’s Newest Markets Yield Mixed Bag Of Results,”, Lori Ranson, July 27, 2007.
    USA Today, “JetBlue bumps founder out of CEO role; COO Barger steps in as Neeleman remains on board as ‘visionary,’” Barbara De Lollis, May 11, 2007.
    Los Angeles Times, “JetBlue changes CEO, may move in new direction; Operating chief David Barger replaces David Neeleman and could be more open to a merger.” Peter Pae, May 11, 2007.
    Newsday, “JetBlue taken for bumpy ride; Falling share prices, lagging earnings and more competition continue to buffet the Queens-based airline,” John Wilen, September 3, 2007.
    Business Week, “JetBlue Customers Stand by their Carrier,” Staff, March 26, 2007.

    [1] Newsweek, “Skies Were Cloudy Before Jet Blew It,” Allan Sloan with Temma Ehrenfeld, March 5th, 2007.
    [2] USA Today, “JetBlue bumps founder out of CEO role; COO Barger steps in as Neeleman remains on board as ‘visionary,’” Barbara De Lollis, May 11, 2007.

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